Nomura is much more constructive on EUR/CHF in 2013, and expects the pair to spend some time trading well away from the floor.

Nomura’s rational behind this bullish view revolves mainly on the implications of the change in the dynamics of the CHF-flow after the substantial compression in the eurozone risk premia.

“From a CHF-flow perspective, the view here is that the reduction in eurozone risk premia to date should be sufficient to see some of the safehaven deposits removed from CHF-based accounts,” Nomura clarifies.

“And with the eurozone risk premium roughly halved, a removal of CHF57bn of these deposits seems reasonable. This would be sufficient to offset six months of the Swiss current account surplus (hence the mid-year target), and the move in our EUR/CHF fair value model (primarily because of reduced risk premia) is consistent with a move in EUR/CHF to the 1.26-1.30 range,” Nomura adds.

In line with this view, Nomura enters $10mn long EUR/CHF at 1.2290, with a stop at 1.1990, first target 1.2600 then 1.3000. Nomura will also look to add another $10mn around on a dip into 1.2200.